Wendy Bounds Podcast 1
Selling Consumers on the Long-Term Cost Savings of Going Green
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John Barba: My guest today is Wendy Bounds, an author and a columnist for the Wall Street Journal and a correspondent for ABC News and CNBC. Her blog site "pureshelter.com" focuses on sustainability and energy efficiency. Her work for the Wall Street Journal, ABC News, and CNBC includes segments called "Remodeling Your Boiler Room", "Test Your Air Conditioner", "Why Solar Hot Water Is Sexy", "Channeling Your Inner Lumberjack", and "Snow Thrower Smackdown." Sounds pretty interesting. Much of Wendy's work deals with consumer issues and in a recent video she is a self-proclaimed "boiler room junkie." Wendy, thank you for joining us.
Wendy Bounds: John, I'm laughing because you got both the words sexy and smackdown in your intro pretty good.
John: Well, those who know me know that's not necessarily an unusual thing. [laughs]
Wendy: [laughs] Good for you.
John: My first question for you Wendy is this: How did a nice girl like you become a boiler room junkie?
Wendy: [laughs] You're going right for the jugular, aren't you?
John: There you go.
Wendy: Like many people, when I bought my first home I didn't know much about anything that had to do with taking care of it. Owning a home is like having a child, right? It has care and feeding that you're going to have to be responsible for for the rest of your life. I've learned basically out of necessity.
I had a home that needed to be fixed up. I had a boiler room that had old, aging, decrepit equipment. I understood this was the heart of the house and provided my heat and hot water but I couldn't have told you how. So it's over time and necessity and love of this house that I became very interested in not only making sure that things worked but how they worked. And I think we're seeing that from a lot of consumers now in general.
I cover this beat at the Wall Street Journal now: home improvement [inaudible] among consumers. And I think interestingly among a lot of women, not only do they want things to work; they want to understand how they work. And I think this again cuts to, this is a very different effect than we've been seeing in the past with people and their boiler rooms.
John: Sure. In my business, we tend to think people only care about their mechanicals when they're not working.
Wendy: Of course. It's the "honey, no hot water" syndrome. Exactly.
John: Right. When we want them to work, we want them to work as cheaply as possible.
Wendy: Right. And I still think some of that is true. You cannot dismiss in this economy the fact that people are still having to look for money saving opportunities wherever they can. Essentially there are two forces at work. We have all this amazing new equipment coming out for the boiler room, right? Whether it's energy efficient hot water heaters, renewable energy products like solar, thermal systems.
But at the same time we also have people in a situation where they're having to watch what they spend. So I think this is a tightrope that people in your industry have to walk right now. And if they walk it well, when we start to emerge out of these dour economic times they're going to be well positioned to take off going forward. If they don't walk it right, i think they could be stuck. So I think that's an interesting conundrum right now.
John: Yeah, I like the tightrope analogy. Green is green but green is not cheap up front. I know from speaking with consumers that's always been a turn off. "I'd really like to go green." "I'd like to do solar." "I'd like to do these other things." But the cost up front gets to be scary and now we start talking about payback and return on investment.
John: How do consumers feel about that? Where is the consumer mind?
Wendy: I think the consumer sometimes says things and they don't actually act on what they say. They say they want to go green, right? They like this idea of lowering their carbon footprint and they want to help the environment. Certainly nobody doesn't want to help the environment.
But the truth of the matter is: Until they see, especially right now, where it helps them; whether it is on a financial basis lowering the amount of fuel that they consume during the year or even an aesthetic basis, we're starting to see this equipment is going to be a lot quieter. This equipment is going to look better in this room. This equipment is smaller.
And by looking better and being smaller, you are going to free up space in this existing room in your house that you're going to be able to use for other things. Whether it's working out, storage, that sort of thing. So I think that those are the things that actually move people. It's a very selfish way that people look at things. And then on the other hand yes, it helps you to go green.
John: It's the old WIIFM argument. What's in it for me?
John: I'll do this but what's in it for me? Sure.
Wendy: Yeah. Yeah. Exactly.
John: What is the consumer mindset on payback and return on investment? Is there a time frame people will consider investing in their home comfort systems to earn that money back, in terms of energy savings?
Wendy: I think this is one of the hardest things to navigate. Because on the one hand you want to talk about payback; because payback is something that can help people in terms of the money savings, and it can be a selling chit. But on the other hand, it can work against you. Because if you tell somebody that the payback of their solar thermal system is going to be somewhere between six and 10 years, they may think "god, six to 10 years. I can't deal with that right now". So I think it's a hard thing to sell.
I think payback should be one point of a selling chit but I don't think it's the only one. I think some of these other things we just mentioned are. I think where it's most helpful are people who know they're going to be in their house for a while; people who know that they're going to be staying put. That can really help.
In my case, I plan to own this house for quite a long time. In fact, I don't see myself, unless circumstances change, selling it. So for me, investing in a solar hot water system was a no brainer. But if somebody is going to be selling their house in the next year or so, the message then has to change; if they're looking to sell the house in the next two years, three years. Because they're probably not going to see the payback on their investment nor are they going to be guaranteed that when they sell their house that they will be able to recoup that investment.
So I think you have to do a very good job navigating that. You have to think about what area people live in. Are they likely to recoup the investment? And again, then point out to people there are these studies out there that show that many of the homes that are selling right now, many of the homes that are getting a premium are homes with some of these systems in them. So I think that becomes compelling to people.
I think telling people that, looking at the fact that you need to future proof your home against resale value down the road if you're not sure when you're going to sell your house, the only way to keep your house competitive with all the new homes being built out there is to have this equipment in there. If you have obselete equipment, you have an obselete home and that's not something people are going to want to buy.
John: Interesting concept: Future proof your home.
John: One selling point for a contractor might be to a homeowner: that if you are moving or if you're not going to be here for the full payback time, this is the kind of thing that can help your house stand apart from some of the other houses that will be up for sale at the same time.
Wendy: Yeah, John. I think that's really true. For me, you have to look at how much housing stock we still have out there in the country. There are a lot of new homes being built, but we have all these older homes out there. So, what's going to happen to them? And there are people who are in these homes like myself.
It's a 1978 house. I love this house. I love the architecture of it. I love the bones of it. But when it was built in '78, we just simply didn't have this building technology available to us. We didn't have these high efficiency heating and cooling products out there. So every time I think about this home, I think about it in terms of: how am I going to get this home up to speed with all those amazing homes I see in Dwell Magazine that are energy proofed within an inch of their life? Right?
Wendy: It's not realistic for me to start tearing down my exterior walls and trying to add insulated panels and things like that. Unless I'm going to be doing a big renovation, I can't do that. So, where can I future proof my home and get the biggest bang for my buck? Where can I do that and it's not going to disrupt my entire life? I'm not going to have to rip down walls? Well, the boiler room is one place to do it. Air conditioning, heating units, washers and dryers, those types of things. That's actually where I can, when the time comes, future proof my home and not have this huge disruption.
John: Now, what sort of things did you do to your home? I saw on your blog that it's a 1978 deck house.
John: I personally have plumbed and heated more deck houses than I care to remember in my life.
Wendy: Yeah. Not easy when it's a retrofit. [laughs]
John: No, and going in the first time is no picnic either.
Wendy: Yeah. Yeah
John: What sort of things did you do? You mentioned the solar panels and I noticed that you had upgraded your boiler as well.
Wendy: Yeah. I've done both of those things and am in the process also of getting some new ductless air conditioning units to go in rooms that don't have them. The house fortunately was well designed in that it is a passive solar house. It was designed appropriately within the landscape, which is a big boon for me both in terms of heating and cooling in the summer. But, there's no ductwork in the wall; there's no central air. So, there are two older ductless units and there's some rooms that don't have air conditioning. So, I'm looking into some very highly efficient ones there now.
And these tax credits: obviously your folks know these tax credits are a major selling point right now. By the end of 2010 we'll see one of them expire, the 30% up to $ 1,500.00 federal tax credit. They're still honing in on this "cash for caulkers", A.K.A. the Home Star Bill. If that passes, there will be some other pretty lucrative rebates up front. The danger of becoming too dependent on those is you're selling stuff is obviously, they're temporary; they can go away. But I do think that they serve a general purpose to get people interested and to inspire people to take a look at this equipment.
In my case, I put in a new high efficiency boiler. It actually just came short of qualifying for the tax credit but I made a very conscious decision to put this boiler in for other reasons because it was a better boiler for my situation and what I needed to do. Because I had become so educated about it, I bought it anyway without the tax credit and I think that leads to another point; that the more your customer base, you can get them interested, don't assume that they don't care about the technicalities.
Don't assume that they don't want to know the ins and outs and particularly don't assume that with women. Unfortunately, that sometimes is a knee jerk reaction but you will find that if you can get the woman, the female in the house interested in what's going on with your HVAC equipment, you're going to do a lot better selling the equipment because they will take the time to do the research and they will drive these purchasing decisions.
The more somebody understands what you are putting in and how it works, they are invested in it. They care and that's going to help in terms of any relationship you have with them going forward. So, right now I have the air conditioning units going in. I have the new boiler. I have the solar hot water system. I think that pretty much sums it up for now.
John: How did you become so educated? What were some of the resources that you used to learn enough to make a good, informed decision?
Wendy: Absolute, sheer desperation. [laughs] When you move into a structure; and again, there are things going wrong with it and you don't want to just turn it over, you can't trust everybody out there, right? You want to make sure you're not getting ripped off and the only way to do that is to basically learn a lot.
The people that I end up working with, the contractors, are the ones who, you can tell, they take the time to explain it to you. They're not shy. If you go on the internet and you find something, you print it out. I must have driven the electrician and the plumber nuts with all the stuff I printed out and brought to them on the internet when we were doing my solar hot water system. But they handled it amazingly.
I will hire them back for any and every project now because they didn't fight me when I brought them things. If they didn't know something, they said it. They went online. They looked at the links I sent them. They communicated with me via email. This is a huge selling point for me to work with somebody because you can't always get somebody on their cell phone but to be able to communicate with my contractors via email is terrific.
So again, I think that I got interested because I was desperate and then the more I learned the more I came to just enjoy it. It is the heart of the house. If people could come to understand that this mechanical room, their boiler room, is what gives them what they cook with half the time, and what they shower, and the hot water for their clothing.
People just don't get that and I think once you begin to understand that, you come to respect that room; and then the better looking and less scary that room becomes and the more you know about it, the more you want to invest in it and make improvements to it.
John: Sure. I hear my customers, the contractors, saying all the time people would rather spend money on a granite counter top than on a better boiler or a newer boiler and they'll have that frustration but I think you're right. A little bit of explanation and patience goes a long way. A better boiler does a lot more for a home and for your life than a granite counter top.
Wendy: Yeah, there's a guy who's out in California who's a contractor I talk to a lot who installs renewable systems and he always says "well, what's your payback of your granite counter top, right?"
John: Right. Right.
Wendy: So you immediately, when you install ... This is what I think about my solar hot water system. I immediately start ... It was a big up front investment but the tax credits certainly helped and I started saving money the minute that went in. I put the granite counter top in. It's great. It looks good but it's just waiting for me to knick it or crack. You know what I mean?
Wendy: It's kind of a depreciating asset in some way. Although, return on your investment; people do like to see granite counter tops in homes. So, you get both. I don't think it's a matter of putting down the granite counter tops. I think it's a matter of saying look, you install this, you immediately start to see lower fuel bills. And I can tell you ...
And I think getting people to be able to talk to other customers who already installed these systems helps. I spent a lot of time just talking to people in my neck of the woods who had installed solar hot water systems so I could see how it was working. I went to their house. I checked out what they looked like. I saw that they weren't hideous.
I think that makes a big difference and I think that just going forward, the more people can think about that in general terms of, this is saving you money. The first summer you go, like I have this is my first full summer, and your boiler doesn't kick on the entire summer to heat your hot water because you've got those panels, that feels amazing. I can go look at my propane tank gauge and look and it's not going down. Right?
Wendy: So, those are things I would just sort of play up; I enjoy and other people might enjoy too.
John: Sure. To wrap up, one last question for you Wendy. What do professionals ... If you had a group of heating professionals in front of you and you said, "Look, these are the things you need to pay attention to when talking to your consumers," what two or three things might you share with them? Say hey, consumers care about this and you need to appeal to this. What would you suggest?
Wendy: I think as much as you can actually crunch the numbers for them; I mean, the people who come in and take your energy bills for the year and they crunch and they do the work and they start to show you, this is how much your home will save in this year and this year and this year going forward. That helps.
Laying out the tax credit information. Don't expect them to do it. Help them work through those numbers themselves. Laying all that out up front. I think that's going to begin to help quite a bit. So when they say, well why can't you put in cheap boiler or furnace "X," you can say well, you could put that in but look, here's where it actually becomes not as good of a proposition for you to do that. You have those numbers there in front of you and you take the time, the up front time, to do that work.
You're not going to get every client to sign on to you but you better believe they'll still be thinking about it down the road and if they don't invest in the system with you immediately, they may do it in a year or two years. So, even if you don't think you're going to get the sale immediately, I think it's worth putting out that up front investment. I would say that number one.
Number two: I would say that you're there and available. Through email, send them links to things that they seem like they're somebody who they want to read, who wants to read and who is interested. I would send them generic, not hard sales pitch information about your product. They're obviously going to have it. But send them general links to things to read about things to educate themselves and if you can get them interested in this, you have a relationship beyond just the guy or the woman trying to sell you something and I think that's very helpful.
And too, just talk about the other advantages to some of these systems that again, if they look a lot better, they don't smell as badly, they don't leak, they're clean looking, they look like iPods in some cases and you're certainly going to free up a room to have a lot more things. I think those things all will play into effect and be very helpful.
And I think if you can also rule out things that they don't need. If someone is saying "I want the biggest, baddest boiler," and you know it's way oversized for the house ... The minute somebody tells me I don't need something, I start listening to them a lot more. Right?
Wendy: Because all anybody ever tells you is what you do need. [laughs] So, tell me what I don't need and help me figure out a way to scale back what I'm going to be doing and I'm going to start believing you a lot more.
John: This goes back to the basics. Help the customer solve some problems.
Wendy: Yeah, I think so and I think, too, just help people understand where all this fits in the general scheme of the future of their home. Yes, you can get away with putting in a system that might not be that efficient for the next couple of years but if you think you're going to stay here for a long time, don't let your house become an obselete entity.
More people, when they go to buy homes now, they are asking to see utility bills. They are comparing utility bills. This is only going to grow as a trend. So, if you want to hand over your utility bills to somebody who is thinking about buying your home, you certainly want them to be as low as possible.
If I were going to go buy a home now, the first place I would go is to the boiler room. That's where I would go look. Now, not everybody's like that but I think you're going to see more people being that way and I think you're going to see it being a huge selling chit, just how efficient your home is. So, I think that I would keep that in mind too.
John: Sure. Other than the lights it's the one thing that uses energy, is your mechanicals.
John: Nothing else really does.
Wendy: Yeah. Yeah. I think that it's one of the big suckers of energy in the house. So again, when you turn on your hot water, you don't necessarily ... We've been trained to know that leaving the lights on wastes electricity, wastes energy. I don't know how much people still think about that with things like their hot water necessarily. They can see it with their heating bills but I think anything you can do to drive that home helps.
John: Alright. Wendy Bounds, from the Wall Street Journal, ABC News, CNBC. Thank you very much for your time.
Wendy: Thanks, John.
John: It was a great education and we'll look forward to reading more of your stuff online.
Wendy: Great. Thanks for having me, John.
John: Thank you.
Wendy: Take care.
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